2018 (2) TMI 657 - AT - Customs

Misdeclaration - Import of restricted item - Copper Wire Scrap with PVC sheathing of Druid grade - main contention of the department is that the imported goods have been misdeclared as copper scrap, lead scrap and insulated material whereas they are actually Copper Wire Scrap with PVC sheathing of Druid grade which can be imported without a license only by the units registered with the Ministry of Environment and Forests but the importer herein does not possess such license. Held that - While the imported goods were in fact copper wire scrap only, even as per the commercial invoice, pre-shipment inspection certificate etc. and Form-9 submitted under Rule 16 (5) of the Hazardous Wastes Rules, the declaration of the goods in the Bill of Entry as copper waste scrap, lead scrap and insulation material separately has not helped their case with the department. Very possibly, the appellant had made such a declaration taking into account that the percentage of copper in the imported goods was 41%, lead 37% and plastic and ferrous 22% as per the transboundary movement documents and load port certificate. When the goods are allowed for re-export, there should not be any redemption fine because redemption fine is for enjoyment of the goods in the manner of home consumption even when a law is violated. Redemption fine in a way redeems the violation committed by the importer and paves the way for unencumbered enjoyment of the imported goods thereafter. However, this is not a case where the goods have been cleared for home consumption - redemption fine is an overkill and is to be set aside. Penalty u/s 112 (a) of the CA 1962 - Held that - Lalkamal, the High sea buyer, M/s.Sterling Steels, the original importer will surely require a rap on the knuckles at least for the wrong declaration in the Bill of Entry. However, the penalties imposed on these persons under Section 112 (a) of the Customs Act, 1962 of ₹ 2 lakhs each is excessive and interest of justice would be served by reducing the penalties on them to ₹ 1,00,000/- (Rupees one lakh only). Penalty on Vimal Kumar, Asif Rehman, proprietors of Sri Lalkamal Enterprises and Sterling Steels respectively - Held that - penalties cannot be sustained since they are proprietors - it is settled law that both proprietor and the proprietaryship firm cannot be penalized in such matters. Hence penalties imposed on these persons are set aside. Appellant Shri Abdul Saleem has been indicated as friend of Shri Asif Rehman, Proprietor of Sterling Steel who had allegedly arranged import consignment from Qatar - the said appellant was only in the nature of a broker or agent who brought sellers and buyers together and it would be unfair to penalize him. The penalty imposed on him is also therefore set aside. Appeal allowed in part.

Summary

Issues:
1. Misdeclaration of imported goods as Copper Scrap, Lead Scrap, and Insulation Material.
2. Confiscation of imported goods and imposition of redemption fine.
3. Re-export of the imported goods.
4. Imposition of penalties under Section 112 (a) of the Customs Act, 1962.

Issue 1 - Misdeclaration of Imported Goods:
The case involved the misdeclaration of goods by M/s. Sri Lalkamal Enterprises, where the goods imported were actually Copper Wire Scrap with PVC sheathing of Druid grade. The importer did not possess the required license for importing such goods. The department contended that the misdeclaration was to avoid licensing restrictions. The appellant argued that they were registered under the Hazardous Wastes Rules and had complied with all requirements. The dispute arose due to a discrepancy in the registration certificate specifications and the actual imported item. The tribunal found that the misdeclaration led to confusion, but the goods were allowed for re-export, and hence, the redemption fine imposed was set aside.

Issue 2 - Confiscation and Redemption Fine:
The tribunal noted that the redemption fine is for goods enjoyed in home consumption despite a violation. Since the goods were ordered for re-export, the imposition of redemption fine was deemed unnecessary. Therefore, the redemption fine was set aside. The tribunal emphasized that the redemption fine is to redeem the violation, which was not applicable in this case.

Issue 3 - Re-export of Imported Goods:
The tribunal ordered the re-export of the imported goods within two months from the date of the order. This decision was based on the misdeclaration of goods and the lack of required licenses for the imported goods. The re-export was deemed necessary to rectify the misdeclaration and licensing issues.

Issue 4 - Imposition of Penalties:
Penalties under Section 112 (a) of the Customs Act, 1962 were imposed on various parties involved in the importation. The tribunal acknowledged the misdeclaration in the Bill of Entry but found the penalties excessive. The penalties were reduced from ?2 lakhs to ?1 lakh for some parties. Penalties imposed on certain individuals were set aside as they were proprietors and could not be penalized along with the firms. The penalties on a broker or agent involved in arranging the import consignment were also set aside, considering their role in the transaction. The tribunal partly allowed the appeals by modifying the penalties imposed on the parties involved.

Overall, the tribunal addressed the misdeclaration of goods, the confiscation and redemption fine, the re-export requirement, and the imposition of penalties under the Customs Act, providing detailed reasoning for each decision while considering the legal provisions and arguments presented by both sides.